FTX’s bankruptcy filings show ‘complete failure of corporate controls’
Bankruptcy filings have called out Sam Bankman-Fried (SBF) and the entire FTX team for a complete failure of corporate controls.
The latest bankruptcy filings have blasted SBF and his executives for completely failing to have a handle on their corporate affairs.
FTX’s bankruptcy lawyers claim that SBF is actively trying to disrupt the entire bankruptcy process for the various entities that fall under his company. According to the new CEO and lead lawyer, SBF is currently fighting against the lawyers and executives hired to handle the bankruptcy process.
The lawyers have filed an emergency petition to transfer the Chapter 15 bankruptcy proceedings in the Bahamas to the United States Bankruptcy Court in Delaware. The move is designed to ensure that the various bankruptcy cases are handled in a single US court. Adam Landis, a partner at Landis, Roth & Cobb, said;
“In terms of the celebrity of Mr. Bankman-Fried, his unconventional leadership style, his incessant and disruptive tweeting since the Petition Date, and the almost complete lack of dependable corporate records, these Chapter 11 Cases are unprecedented. Mr. Bankman-Fried, the co-founder, and controlling owner of all of the Debtors and of FTX DM, appears to be supporting efforts by the JPLs to expand the scope of the FTX DM proceeding in the Bahamas, to undermine these Chapter 11 Cases, and to move assets from the Debtors to accounts in the Bahamas under the control of the Bahamian government.”
SBF and his team were criticised for their complete lack of corporate handle on the company’s affairs. Chicago-based attorney John J. Ray III, who was appointed the CEO of FTX after the collapse and is currently handling the bankruptcy filings, attacked the way SBF handled the company. He wrote;
“Never in my career have I seen such a complete failure of corporate controls and such a complete absence of trustworthy financial information as occurred here,” wrote Ray, a corporate clean-up specialist who is a veteran of the Enron bankruptcy. “From compromised systems integrity and faulty regulatory oversight abroad, to the concentration of control in the hands of a very small group of inexperienced, unsophisticated and potentially compromised individuals, this situation is unprecedented.”
In this latest cryptocurrency news, Ray revealed that most of FTX’s books were not audited. Hence, the information in the company’s books might not be accurate. He added that SBF is actively trying to undermine the bankruptcy procedure, clarifying that the former CEO no longer speaks for the company.
A balance sheet of Alameda Research revealed that the hedge fund lent $1 billion to Bankman-Fried personally, another $2.3 billion to a company called Paper Bird Inc., $543 million to co-founder Nishad Singh, and $55 million to executive Ryan Salame
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